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Letters to the Editor

Predatory loans

February 20, 2009

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To the editor:

Robert Baker, in his letter of Feb. 15, was far too modest in describing Housing and Credit Counseling Inc.’s (HCCI) help for the financially distressed; and, far too polite in characterizing the payday loan industry, including QC “Quik Cash” Holdings.

For nearly 37 years, HCCI has annually helped thousands buy homes, resolve debts and gain financial literacy.

Payday lenders, by contrast, have harvested millions of scarce dollars from the impecunious and propelled many into bankruptcy. They offer what consumer advocates typically describe as “legalized loan sharking,” charging interest from 391 percent to 441 percent (Congressional Research Service), rates 8-10 times higher than the 45 percent threshold used in defining federal criminal extortion.

Payday loans are so pernicious that Congress, notwithstanding full-throated industry opposition, limited rates charged military personnel to 36 percent, 10-12 times less than “normal” payday charges. Not surprisingly, the industry launched a campaign to deprive all Americans of this protection.

QC Holdings gave the last campaign of Congressman Moore, a member of the Financial Services Committee with payday lender oversight, $24,619 (Center for Responsive Government).

In Arizona, the industry spent $2 million in a failed attempt to inveigle public support for its confiscatory interest rates. So the payday lenders convinced the legislature to cap the rate at a modest 60 percent, six times lower than in Kansas. Notwithstanding the reduced rate, QC has 38 outlets in Arizona (QC Web site).

Kansas lawmakers should provide us the same protections against predatory lending that Congress gives our military.

Jerry Harper,
Lawrence

Comments

Charles L Bloss Jr 5 years, 10 months ago

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Alia Ahmed 5 years, 10 months ago

Payday loan companies are just more upfront about their fees. How about a bank that charges $28 or more for insufficient funds or runs the largest checks through first so there will be more checks bounce. How about credit card companies that charge $39 for late fees or over the limit fees? Our government has been bailing out those banks and credit card companies and they turn around and raise their interest rates and fees.

John_B 5 years, 10 months ago

Let me make my own choices. I don't need you or the government to make them for me. I know exactly the cost of the payday loan and exactly when I have to pay it off. Try that with a credit card. I want the right to choose products that my needs. We don't need some egghead telling us what loans are best for us. PS. My payday loan was cheaper than a bounced check or my balance on my credit card.

jkursman 5 years, 10 months ago

Payday loans are accessed by 19 million Americans each year because they offer significant cost savings versus the average $27 plus interest fee on a bank overdraft according to a recent FDIC study of banks or the average $29 fee on a late credit card payment.

APR is a measurement tool designed to compare annual products and does not accurately depict the fee a Kansas resident pays for a $300 TWO-WEEK payday loan. Similar products offered by traditional banks in Kansas cost $30 with terms that may result in equally unrepresentative fees and APRs.

Do not limit consumer credit options and competition. Working Kansas families will pay the steeper price. "

dvrlover 5 years, 9 months ago

The short term lending industry has been a favorite punching bag of politicians, so it's no shock they spend money on lobbying. What’s truly shocking is when predatory banks like Worldwide Savings create nonprofits like the Center for Responsible Lending to keep political pressure on short term lenders, thus deflecting scrutiny from their own fraudulent practices. I applaud the noble efforts of the HCCI helping folks manage their credit more intelligently. However, I question the motives behind attacking payday loans. We are in worldwide economic turmoil not from check cashing stores making $200 loans, but from predatory mortgages taking people for everything they have.

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